Dutch electrical parts distributor Hagemeyer - parent of Birmingham-based Newby & Eyre - has agreed to a sweetened 4.85 euro (£3.39) per share break-up, all-cash offer from French rival Rexel, the two companies confirmed yesterday.
The bid, which came after Hagemeyer had earlier rejected lower offers, is worth £2 billion, based on 589.8 million outstanding Hagemeyer shares. Including convertible bonds the offer would be worth £2.2 billion, and including debt it would be £2.42 billion, a Hagemeyer spokeswoman said.
Last month Rexel offered 4.60 euros (£3.21) per Hagemeyer share or £1.88 billion, but Hagemeyer's management said this offer undervalued the company.
Rexel and Hagemeyer said in a statement they would enter exclusive negotiations, part of which involve selling on certain parts of the Hagemeyer operation to French group Sonepar, which last month mounted its own bid to buy the Dutch company based on an offer of 4.25 euros (£2.97) per share.
Analysts from Rabobank and Petercam said they expected the offer to be the final one, but SNS Securities analyst Martijn den Drijver said in a note that Rexel's higher bid was not enough for Hagemeyer shareholders as cost synergies alone would be worth more than the 0.25 euro per share increase. "As a result, we do not think that Orbis, Pictet, GLG Partners, Halcyon and Bestinver (holding some 23 per cent) will be happy with 4.85 euros and may hold out for a higher price," Mr den Drijver said.
Earlier this month, a poll of eight analysts had predicted on average that Rexel would sweeten its bid to 4.96 euros (£3.47).
Seven did not expect a third party to start a bidding war. Hagemeyer's management and supervisory board would recommend Rexel's revised offer, which was subject to certain conditions, including due diligence and finalisation of a merger protocol, the companies said.
Sonepar would offer its 10.5 per cent Hagemeyer stake to Rexel if Rexel launched a bid, the companies said.
Rexel said last month it would sell Hagemeyer's American, Asian-Pacific and certain European activities to Sonepar if a deal was successful.
ING analysts agreed the latest bid would be the end for Hagemeyer.
"This is the end game for Hagemeyer, we think. If the pre-conditions are met, we do not envisage a higher offer by a competing third party to top Rexel's offer," the analysts said.
SNS Securities, however, was not so sure. "We do not think that the 0.25 euro higher offer of 4.85 euro will entice shareholders, and assume that they will hold out for a higher offer," the analyst said.